Big, red 'For Sale' signs flapping in the wind are the tumble weeds of the 21 century. Signaling emptiness and recent catastrophe, these markers of market disaster are said to have proliferated because of predatory lending and lax standards. But a new report from the Natural Resources Defense Council (NRDC) shows another cause of the rapid foreclosure rate: car dependency.
Looking at data from more than 40,000 mortgages throughout Chicago, San Francisco and Jacksonville, Fla., the researchers behind the Location Efficiency and Mortgage Default report found that the rate of mortgage foreclosure actually decreased in neighborhoods that were more compact, walkable and connected to public transportation (after accounting for important factors like income). According to a recent NRDC release:
"The effect of location efficiency is clear when comparing foreclosure probabilities for two homebuyers with exactly the same profile in terms of credit score, debt-to-income ratio, and loan-to-value ratio in differing neighborhoods. The research shows that the buyer in the more location efficient area will be less likely to default. (For a dollar and cents example, check this blog post.)"
Able to be less reliant on their cars, people living in walkable, connected neighborhoods had the flexibility to save money on transportation -- a household expense that can be more than 17 percent of American homeowners' total costs.
To create stability in the real estate sector, the link between transportation costs and foreclosure rates needs to be addressed, say the experts at the NRDC.
The report strongly focused on 'location efficiency' as a way to create this stability. Location efficiency is a phrase that describes how easy it is to live in your neighborhood without a car. If it's easy for you to walk to work, places of interest, grocery stores or the bus stop, then your house is highly location efficient. NRDC researchers say that understanding this concept will be key to predicting mortgage performance and could be a helpful new tool for addressing the continuing mortgage default problem.
Some people get why compact, walkable cities make sense in an instant; others need some convincing. That's why quality research like this, that backs up big picture thinking on bright green cities, is important. Research like this helps people stand up and say no to proposals for more roads and parking lots, and helps others realize that spending more money to live in the city center equals money well spent. Now to get policy that reflects this and politicians who support it. But that will take political will.
Image credit: respres, Flickr CC
Like you say, some people get why compact, walkable cities make sense in an instant; others need some convincing. I didn't need convincing but this may prove useful for convincing others. thanks